Bloomberg discussed on Bloomberg Markets

Automatic TRANSCRIPT

Ninety the incredible six days sixty percent rally in protest of left Wall Street watchers scratching their heads have screeched to a halt today right now down fifteen percent of seven fifty three and affair that's a Bloomberg business slash I'm quite and informed perspectives and expert data driven commentary on breaking news at thirty three on Wall Street time to check in a Bloomberg opinion we're going back and calmness about you know she's a senior a TF annals for Bloomberg intelligence and Eric we could mean you're typically we talk about what new cool ETFs vanguard is launching a different twist today now they're talking about getting into the private equity business what's going on with our favorite ETF issuer yeah I mean any time you hear vanguard getting into something most people shutters specially if you're in that business but I would say if you're in private equity don't worry so much this is really aimed at the advisory business wealth management this is van guard that's what they want to disrupt here so if you are an adviser and you want to get bigger clients institutional clients you need private equity so this is just to sort of round out there other offerings threaten the press release says here part of an ongoing effort to further expand the suite of products to our advisory clients and Tim Buckley said back in March of last year we haven't really he's a CO yeah that's CO vanguard to me this quote is really who should be on alert here we have been really please for the price competition we have introduced in the mutual funds here we'll late that we have had that much of an impact that the area that really needs to come down in price is advice okay this is this is really a compelling point because my first initial taken he this was this is where the fees are private equity and so of course vanguard's gonna want to get a private equity but it's being sub managed by somebody else isn't necessarily them building out their own private equity capacity with in the house this is more about what you're saying which is to have a bigger suite of offerings institutions is that is that the right read of this yeah I'm gonna bet there's no there was nothing in the press release about the what the cost would be but I'm gonna bet it's going to be on the cheaper side for a private equity fund probably on the expensive side if you're talking ETF prices but vanguard's not gonna do anything that's like you know to control price wise so then you're not granted the big loser here is the advisory business but does this also start to put pressure on private equity fees no way that we really haven't seen until now it can and you know you cannot underestimate vanguard I was looking at the flows this year vanguard takes in more than everybody every year but this year what's interesting is fidelity blackrock Schwab they're all Startin to catch up to vanguard but the reason they're catching up is because they've all just copy vanguard in the offer dirt cheap beta so in a way vanguard is responsible for the whole enchilada now if they get into private equity and they see clients maybe come over and work with them it's possible but I see the price pressure in private equity to talk to Paul gold Goldberg our P. analyst and he's a very adamant about this as well that's not going to come for a while we think medium long term at best but right now they're visor business is up to a hundred and sixty one billion and it basically is only a couple of years old so that's a fast growth for that business and member they have all these fund investors who grew up with them and now have more complicated life matter so they've got this natural pool of money coming in that they're going to offer advice on and their fees are low the highest for you can pay is thirty basis points but if you have over twenty five million the the charge of five wow it's just extraordinary so who gonna be initially kind of the customers for this private equities I wouldn't think it would be appropriate for every you know individual Nestor for example it institutions right so you're gonna have to be qualified so he I mean here's a quote from Presley's many institutional clients seeking alpha sources not readily available in the public markets this also speaks to a bigger issue which is the private equity markets are growing public equity markets not growing as much and some people assuming that regular phone companies are going to have to get into private equity to keep up with the times so who are the big advisory firms that should be on notice I say it will all the big ones Meryl U. B. S. and then also I think R. A.'s to a degree I think the are a business if you our specialists in your local probably fine but anyone in the middle middle level or bigger I think that's too vanguard typically takes out the guys how does vanguard lower the advisory fees here what's our secret sauce well the secret sauce is the mutual ownership structure they're basically designed like a coop so their investors are vanguard's not a public company no that's right not much is known about it that if it results Malvern Pennsylvania yeah private company there if they keep such a low profile yet six point two trillion assets under management yeah every time they get new profits in date instead of you know doing things with that that money they typically vote because the fund investors are the shareholders so of course we're gonna vote to lower the fees so for fifty some years they've been lowering the fees on funds and as I like to say David they were lowering fees before it was cool now everybody wants to do it they're already attendance everywhere so in in their mind I think they are much more playing a different game they're not looking for profits they're looking to just lower costs for investors everywhere so if fidelity gets flows offering index mutual funds for two basis points I think vanguard takes that as a win for them and I think if they can maybe have an effect on private equity they'll probably take that as a win as well but I think ultimately right now their purpose is to build out this advisory business called the personal advisory service P. A. S. probably three scariest letters if you're an adviser right now yeah P. A. S. move she does thank you so much for being with us of of liver intelligence our ETF group here fascinating take I actually I had a different take when I first saw this I thought the try to actually make profits in the place where the profits are actually left yet but it sounds like they're just changing the game and if they're changing the game that means that someone's gonna lose and certainly is gonna be the advisory business but I would also just throw out there that private equity firms are watching this pretty close yeah into that to see how much this could potentially shrink those fees which have been stubbornly at two in twenty actually for the most part right now it's down to like you know in studios in Washington DC Lisa the bill and Melinda gates foundation is committing up to a hundred million dollars to the international fight against the corona virus the respiratory illness has killed close to five hundred people in China confirmed infections near twenty five thousand patience is wearing thin hospital workers who are not overworked and exhausted is in short supply medicine is in short supply and keep in mind you have large areas of China around will Han and bay province fifty million plus people we're hearing are being quarantined and cannot move Bloomberg Stephen angle is in Hong Kong were arrivals from mainland China will be quarantined under a new policy that takes effect to this weekend president trump declared the state of the union stronger than it's ever been in his speech last night but signs of political disunion are on full display this morning Donald Trump came into the house chamber and essentially said that the greatness of America comes not from our values not from our principles not from our people but from Donald trump's democratic senator Chris van Hollen of Maryland now the president did not mention the word impeachment in his speech by this afternoon he hopes to put that in the review for good the Senate is likely to vote to acquit in a vote set for four PM Wall Street time ahead of that the president will welcome Venezuela's one wide to the White House the opposition leader to embattled president Nicolas Maduro was aghast at the state of the union last night a man behind one of the most celebrated shows in TV history has died gene Reynolds wrecked the dozens of credits before he helped develop match in the nineteen seventies he died this week of heart failure at the age of ninety six global.

Coming up next